How do second hand car traders make money?

How how do second hand car traders make money?

• Answer:

  Thanks for the easy question. Unless Montreal has different rules stopping free trade this is how they make money. You trade your car in and you get the used wholesale value they believe it is worth. If they can sell your car for 10,000 dollars then the used wholesale value is half that. Now you are buying a car so there is a profit to be made there. With a new car there are dealer incentives paid by the manufacturer to the dealer. Then there is a markup. A 40,000 dollar car has about 15% markup before add ons. Then they add on sun roof wheels sports package or other features like step ups for an SUV. These have about a 50 to 70% markup. Then you finance it and they make interest. You also pay dealer prep. This is the prep done to new cars so they are not covered in paper and other stuff. This is where the new car smell comes in. You are smelling solvents used to remove stickers and clean the car. So now you are paying new retail and only getting used wholesale for your car. The profit margin is pretty good even if they knock off some bucks and give you the dealer incentive. Usualy new car dealers sell the car at an auto auction and get about a 10% profit off what they bought it for. Other dealers keep the car and clean it up. Then sell it at retail for a 50 to 70% profit. By adding add ons they make more money on it.If your car had a nice stereo and a car alarm they take that out and put a stock radio and remove the alarm so they can sell the upgrades. Many new car dealers only sell cars that came back from leases and were under milage, or they buy some used cars at the auction that fit the bill. But a used car dealer buys at the auction or sells what they took in trade. So they can expect to make between 5000 and 7000 in profit on your used car. This is why you want to have cash to buy your car and buy it from a private party who has taken care of the car. Have it checked by a mechanic. Sell your car privately and make sure it has all the fluids changed and it is detailed before you take a good picture and list it for sale. This way you get the most for your car. Don't worry if you have to wait a few days between cars you can ride a bike or rent a car and it will save you 5000. dollars. I bought my used car from a friend and it had 6000 miles on it and a full warranty.Warranties are transferable on cars. My Jaguar X type was selling for 39,000 dollars and I paid 27,500.00. I got a loan at my credit union at 3% and I sold my used car a 1998 Toyota Camry for 6,500 dollars. It had over a hundred thousand miles. Had I gone to the dealer they would have given me 3500 for my car and charged me 39,000. plus dealer prep and add ons. I saved at least 14,500.00 dollars not including dealer prep taxes and add-ons that would have added up to over 3500 dollars.